Utah lets public pay with gold, silver

FARR WEST, Utah - Most people amass the pure gold and silver coins produced by the U.S. Mint for collections or investments, not to buy Slurpees at 7-Eleven.

FARR WEST, Utah - Most people amass the pure gold and silver coins produced by the U.S. Mint for collections or investments, not to buy Slurpees at 7-Eleven.

"You'd be a fool," Tom Jurkowsky, a spokesman for the Mint, said of the Slurpee idea, "but you could do it."

After all, although the 1-ounce American Eagle coin produced by the Mint says "One Dollar," it is actually worth more like $38 based on the current price of silver. (An ounce of gold is worth more than $1,500).

Now, however, Utah has passed a law intended to encourage residents to use gold or silver coins made by the Mint as cash, but with their value based on the weight of the precious metal in them, not the face value - if, that is, they can find a merchant willing to accept the coins on that basis.

The legislation, called the Legal Tender Act of 2011, was inspired in part by tea party supporters, some of whom believe that the dollar should be backed by gold or silver and that Obama administration policies could cause a currency collapse. The law is the first of its kind in the U.S. Several other states have considered similar laws.

Jurkowsky said the new law "is of no real consequence" and is purely symbolic, but supporters say it is more than political pocket change. They say that it is only a beginning, that one day Utah might mint its own coins, that retailers could have scales for weighing precious metals, and that a state defense force could be formed to guard warehouses where the new money would be made and stored.

"This is an incremental step in the right direction," said Lowell Nelson, the interim coordinator of the Campaign for Liberty in Utah, a libertarian group rooted in Rep. Ron Paul's presidential campaign. "If the federal government isn't going to do it, then we here in Utah ought to be able to establish a monetary system that would survive a crash if and when that happens."

Article 1, Section 10 of the U.S. Constitution says no state shall coin money.

Larry Hilton, a lawyer and insurance broker who first took the idea to Utah legislators, and some others argue that a phrase used later, saying no state shall "make anything but gold and silver coin a tender in payment of debts" can be read as a license for Utah's new law and, perhaps, for a state's right to mint its own coins.

State Rep. Brad Galvez, the freshman Republican who sponsored the bill at the request of party leadership, said he was "not trying to push back against the federal government" but simply to "create an alternative" to the dollar that legislators hoped might send a message to Washington about fiscal policy. He noted that the law does not require businesses to accept gold or silver; it only gives them a choice.

Much of the logic of the law is rooted in the belief that the dollar is at risk and that gold and silver are enduring, stable investments. That, too, is in dispute.

"From an investment standpoint, I've always found that if something is heavily advertised on television, it's not a good thing to do," said Gary P. Brinson, a philanthropist who spent 40 years as an investment strategist.